by Kathleen Koster of Employee Benefit News, www.benefitnews.com

President Obama last week shifted political stance on two key health care reform proposals, distancing himself from campaign positions but perhaps moving toward congressional approval of a legislative package by early August.

Despite previous reservations, the President found new reasons to support mandates for all individuals have insurance. Still, President Obama qualified his support, by insisting on an exemption for the poor.

“If we do end up with a system where people are responsible for their own insurance, we need to provide a hardship waiver to exempt Americans who cannot afford it,” he wrote in a letter to Sens. Edward M. Kennedy (D-Mass.) and Max Baucus (D-Mont.).

In another change of policy stance, the president now supports a public plan option to stand beside private coverage in hopes the design will stimulate competition and force insurance companies to offer affordable rates.

“This will give [the American people] a better range of choices, make the health care market more competitive and keep insurance companies honest,” he wrote.

The public plan shift was the second softening last week to previously held positions during his campaign. After meeting last week, Baucus said the president is now considering taxation on employer-sponsored health benefits, but stressed that such a plan was not his first choice. In response, White house spokesman Reid Cherlin said that “the president made it clear during the campaign that he has serious concerns about taxing health care benefits, and he has introduced his own revenue proposal, which he reiterated” in the meeting with Baucus.

Economists, many of whom support the taxation proposition, calculate that the subsidy cut would have raised tax receipts by $246 billion in 2007.

Even though a capped or eliminated tax subsidy on health care benefits would significantly contribute to overhauling the health care system, many employers and union groups oppose the move. Employers realize the significance of benefits as retention and recruiting tools and collective bargaining groups hold reservations that such a bill would depreciate the value of health care for their members or make it more costly.

“We’ve always had the view that we should maintain the current tax system,” Steve Wojcik, vice president at the National Business Group on Health told Reuters. “We realize there are a lot of gains to be had especially in terms of controlling costs that would benefit the employer-sponsored coverage world,” said Wojcik, whose company represents Fortune 500 companies.

However, not all opponents remain steadfast in their opposition. Sen. Chuck Grassley (R-Iowa), the ranking Republican on the Finance Committee, is optimistic the President’s open arms will encourage bipartisan cooperation to establish an innovative health care policy. The letter, he says, “doesn’t draw lines in the sand,” and “is helpful because of his statements that reform legislation needs to have bipartisan support.”

Whether the final bill will provide for employer sponsored coverage taxation remains to be seen, but Senate Finance Committee members will know shortly. They were told privately last week that draft legislation would materialize by June 17 with markup planned for the following week.

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This entry was posted by Adam V. Russo on Monday, June 8th, 2009 at 4:48 pm and is filed under Health Care Legislation, News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.